When you’re busy running a business, keeping your bookkeeping up to date can fall by the wayside. It’s not uncommon for business owners, caught up in managing the day to day of operations, marketing, staff and customer service, to view bookkeeping as a tedious, time consuming distraction that gets put off until the last possible minute! However, consistent, timely and accurate bookkeeping can become the backbone of a successful business. 

The challenge of keeping records current

Many business owners find themselves in the same boat when it comes to bookkeeping: it’s time-consuming, unfamiliar, and can be daunting, especially for those without a financial background. The fear of making errors or simply not having enough hours in the day leads many to delay the bookkeeping tasks that they know they should get on with. This can, unfortunately, mean it’s hard to see your business’s financial health and have a negative impact on the quality of decision-making.

Financial clarity

One of the most immediate benefits of keeping your books up to date is the clarity it provides around the finances of your business. 

This transparency helps you understand exactly what is coming in and going out, reducing surprises and helping you manage your resources more effectively. Using tools like Xero and some of the related Apps allows for real-time tracking of financial transactions, offering insights that are accessible anytime and from anywhere. 

Budgeting and planning

Accurate records are crucial for effective budgeting and financial planning. With up-to-date books, you can see which parts of your business are underperforming and which are exceeding expectations. 

This insight allows you to allocate resources more efficiently and plan for future expenses, ensuring sustainability and growth. If you’re having a better year than expected, you’ll know to set aside more funds for a tax payment or be aware in advance of any cash gaps that may be coming.

Compliance and Tax Management

We all know that there are many different tax and filing deadlines that apply to different types of business. Regular bookkeeping reduces the risk of late filing penalties and makes prompt and accurate submissions possible. 

Monitoring cashflow

Cash is the lifeline of your business. Effective bookkeeping helps you monitor its availability, ensuring you can plan to have enough cash on hand to cover your obligations and your plans. Understanding your cash flow trends can help prevent sleepless nights, highlighting potential shortfalls before they become crises, and having the bookkeeping processes in place is the first step towards monitoring your cash flow effectively.

Identifying financial trends and patterns

Good bookkeeping allows business owners to track financial trends and patterns over time. The resulting data is vital for strategic decision-making and can highlight opportunities for investment or areas where costs could be reduced. Some of the Apps available now require a little setting up, but then can help visualise these trends, making them easier to interpret and act upon.

If you can see the way the business is performing from month to month, or even week to week, you can make changes to improve matters as you go, rather than waiting until year end accounts. Stopping damaging activities quickly can make a huge difference to a business, as can increasing activity that’s having a positive impact. 

Risk management and fraud prevention

Regular bookkeeping also plays a crucial role in risk management and fraud prevention. Discrepancies in records that are updated regularly are easier to spot and can be investigated promptly, reducing potential losses, either from fraud or innocent accounting errors.

Furthermore, with software like Xero and Dext, much of the data entry element of bookkeeping in the modern era can be automated, reducing the risk of human error. They also replace the need for piles of paperwork hanging around the car or office, or files of paper invoices and receipts. 

Delegating bookkeeping responsibilities

For many business owners, the best way to ensure their bookkeeping is handled efficiently while freeing up time to focus on their core business activities is to delegate the responsibility. Whether it’s to an in-house employee or an external specialist, outsourcing bookkeeping can transform it from a chore into a benefit. 

Not only does this free up your time, and enable you to spend it on higher value work, but it also places your record-keeping in the hands of people who can probably complete it far more cost effectively, because they enjoy it and do it all of the time. 

For clarity, this isn’t a service we offer, so we’re not selling here! We can help you find a suitable solution though, so do speak to us if you’re struggling.

Conclusion

Keeping your bookkeeping up to date on at least a weekly basis might seem like a daunting task, but the benefits far outweigh the effort. We’d definitely recommend it be the goal of any business. If you’d like to discuss how to move from your current arrangements to regular bookkeeping, please get in touch. It may take some time, but would be well worth the effort, especially if you have plans for growth.

We’ll look more at bookkeeping in a future post, so keep your eyes open for that one!